China's overall housing market remained resilient in June according to official NBS data on Tuesday, with the average property price rising 0.7% for the month and 10.2% on an annual basis (fractionally below the 10.4% yoy increase in May) even as the decline in Tier 1 cities accelerated and home prices in Beijing fell for the first time in more than two years, while Shanghai declined further and Shenzhen stalled, pointing to significant cooling in China's biggest real estate markets.

Overall, housing prices increased in more cities in June compared with May - out of the 70 cities monitored by China’s National Bureau of Statistics (NBS), 59 saw housing prices increase in June, vs. 57 in May.

On a month-over-month basis, house price growth continued to diverge among different city tiers - average home price fell further in tier-1 cities, while price growth accelerated in tier 2/3/4 cities. Overall, average housing price growth remained resilient. Construction-related activities such as new starts and under construction also re-accelerated in June from May.

The price slowdown among larger cities was due to strict government curbs to keep prices in check with Goldman adding that it expects tightening measures to continue to prevent further acceleration in housing price growth, although smaller cities maintained rapid growth due to less severe checks according to Reuters. Big cities such as Beijing have acted swiftly this year to quell speculative property buying that have shattered price records and fueled concerns about housing affordability.

As Beijing made clear on Sunday, when a warning about "Gray Rhinos" unleashed the biggest selloff among China's small caps in months, worries about growing household leverage have been joined by anxiety over China's addiction to debt, which authorities have been trying to curb over the past year in an effort to defuse financial risks. The latest data suggests the real estate sector is cooling off at a moderate pace and is unlikely - at least for now - to suffer a steep correction.

Remarking on the sharp spread in price trajectory between China's large and small cities, Rosealea Yao, a property economist with Gavekal Dragonomics told Reuters that "sales declines in the biggest cities were quite significant, so prices are certainly not going to rebound" adding that "the mild declining trend will continue through at least the first half of 2018."

More than 45 cities, most of them top-tier cities with a sizable population, have imposed varying levels of restrictions since last October to curb fast-rising prices, with most of the latest measures introduced in late March. As discussed here previously, the cooling effect has been most visible in China's biggest cities. Price growth in Shenzhen, Shanghai and Beijing slowed to 2.7 percent, 8.6 percent and 10.7 percent, respectively, from a year earlier, while from a month earlier, prices in Beijing declined 0.4%, marking the first fall since February 2015. Shanghai prices slipped by a further 0.2 percent, while Shenzhen prices remained unchanged.

Meanwhile, among smaller cities, price gains remained brisk: Luoyang, a third-tier city in central Henan province, topped the list in June, with prices of new units up 2.3% on month, compared with a 1.3% gain in May, taking the annual growth to 10.2%.

Separately, according to the local press, the value of new personal home mortgages in Beijing, Shanghai and Shenzhen in the first half of 2017 was equal to 30% of the total value of home loans in 2016. Still, real estate investment and sales growth both sped up in June after slowing in May, most likely due to more robust demand in smaller centers that have been encouraged to reduce inventory and are not subject to the strict curbs at work in bigger cities, Reuters notes. That has also been reflected in stronger credit demand in the month from households.

Keeping a lid on price fluctuations has become a priority for policymakers in a politically important year, with a major leadership reshuffle expected this autumn.

But to make sure the market is neither too hot nor too cold, authorities have increasingly resorted to administrative measures that many analysts warn are anti-market in nature.

For example, sales prices for new units in a few cities like Zhengzhou - capital of Henan - are not allowed to be higher than the price level seen last October for new units in the vicinity.

Even with the recent Tier 1 declines, however, most local properties remain inaccessible to most potential buyers: as a result of the surge in house prices since 2001 in most major Chinese cities has spurred growing concerns about affordability. As an example. a typical two-bedroom new home in Beijing now costs around 6 million yuan ($870,000), about 69 times the average per capita disposable income in the city, much higher than the ratio of less than 25 times for New York City.

The recent slowdown in wage growth has prompted fear among economists that slowing growth in incomes, which had been rising at double-digit rates for decades, will no longer be able to cushion financial risks in an extremely inflated housing market. On average, China's disposable income was up 8.1% on-year for city-dwellers in the first half of the year, official data showed, below than the 10.2% annual property price growth in June.